Dr. Kaushik Sridhar

2024: When ESG sheds its baby teeth and takes a bionic bite

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First published on Wion News: 31 January 2024

Year 2023 served as a crucible for Environmental, Social, and Governance (ESG) principles. Amidst the roar of mainstream media scrutiny and scepticism, whispers of greenwashing and accusations of hypocrisy swirled. Yet, under this intense heat, something remarkable happened: ESG emerged stronger, its core essence solidified.

Year 2024, however, won’t just be about resilience; it will be a year of metamorphosis, a decisive transformation where ESG sheds its infancy and steps onto the world stage as a fully-fledged force capable of reshaping every facet of how we do business.

ESG vs sustainability: A nuanced distinction

While often used interchangeably, ESG and sustainability have distinct nuances. Sustainability is a broader concept, encompassing the ability to meet the needs of the present without compromising the ability of future generations to meet their own needs.  It’s the ultimate goal, the harmonious coexistence of humanity, nature, and prosperity.

ESG, on the other hand, is a specific tool, a set of measurable criteria to assess a company’s progress towards that goal. It provides investors, consumers, and stakeholders with a lens to evaluate a company’s commitment to responsible and sustainable practices. Think of it as a progress report on the journey towards a sustainable future.

The clearest harbinger of this change is the tidal wave of mandatory climate disclosures rolling across the globe. Gone are the days of voluntary reporting, a patchwork quilt of metrics and methodologies offering little in the way of true comparability or accountability. Standardised frameworks like the International Sustainability Standards Board (ISSB) are establishing global norms, forcing companies to lift the veil on their environmental impact, their vulnerability to climate risks, and their commitment to a low-carbon future. This transparency revolution will be far-reaching, impacting not just publicly traded giants but also smaller players across diverse industries.

But the mere act of reporting won’t be enough. Year 2024 will be when companies graduate from compliance robots to sustainability champions. They’ll move beyond tick-the-box exercises and greenwashing narratives to genuinely integrate ESG into the very DNA of their operations. This means a profound shift in perspective, a move from perceiving ESG as a cost centre to recognising it as a strategic driver of innovation, resilience, and long-term value creation. Imagine design processes infused with eco-conscious principles, where materials are chosen not just for functionality but also for their environmental footprint and lifecycle.

Picture procurement strategies rewired to prioritise ethical sourcing and responsible supply chains, where human rights and social justice weave seamlessly into every transaction. Envision marketing and communication campaigns that go beyond glossy platitudes to authentically showcase a company’s commitment to social good and environmental stewardship.

This isn’t a mere pipe dream; it’s the future beckoning. Forward-thinking companies are already paving the way, demonstrating how embracing ESG can unlock a treasure trove of opportunities. Renewable energy giants are not just selling clean power, they’re building new green ecosystems, fostering community development, and powering sustainable livelihoods. Tech innovators are harnessing the power of artificial intelligence to optimise resource utilisation, predict and mitigate climate risks, and accelerate the transition to a circular economy.

Of course, challenges remain. The patchwork of regulations across jurisdictions can be bewildering, and the lack of universally accepted metrics can impede progress. Furthermore, the threat of greenwashing continues to loom, demanding robust verification measures and stringent enforcement mechanisms. However, these obstacles pale in comparison to the immense potential that lies ahead.

2024 will be a landmark year for ESG, not just because of the regulatory mandates, but because it’s the year the tide of public opinion truly turns. Consumers are increasingly demanding sustainable products and services, investors are actively seeking companies with strong ESG credentials, and employees are yearning for workplaces that align with their values. This potent cocktail of forces will create a virtuous cycle, pushing companies even further down the path of sustainable transformation.

Beyond compliance, towards impact

The bionic bite of ESG in 2024 won’t just be about reporting metrics; it’s about tangible societal impact.

Imagine regenerative agriculture initiatives woven into food production, reviving degraded landscapes and empowering local communities. Think of fashion houses partnering with artisans in developing nations, preserving cultural heritage while building sustainable supply chains. Envision financial institutions actively closing the “green finance gap,” channelling investments towards renewable energy projects and climate-resilient infrastructure in underserved regions.

Tech as the ESG enabler 

The digital revolution becomes the ESG revolution. Blockchain technology ensures transparency and traceability in supply chains, combating greenwashing and human rights abuses. Big data and AI optimise resource allocation, predict environmental risks, and accelerate the development of clean technologies. The metaverse provides immersive platforms for ESG education and stakeholder engagement, fostering a global community of changemakers.

Collaboration, not competition 

The competitive landscape transforms. Companies move from competing on ESG credentials to collaborating on solutions. Imagine cross-industry partnerships tackling complex challenges like plastic pollution or water scarcity. Think of open-source platforms sharing best practices and accelerating the diffusion of sustainable technologies. Envision governments working hand-in-hand with businesses and NGOs to create enabling policies and foster innovation.

The power of storytelling

Facts and figures are essential, but stories move hearts and minds. 2024 will see a surge in compelling narratives that showcase the human face of ESG. From documentaries profiling climate heroes to social media campaigns highlighting the positive impact of sustainable practices, these stories will inspire and empower individuals to take action.

In conclusion, 2024 won’t just be another year on the calendar; it will be a turning point in the history of business. It’s the year ESG will no longer be relegated to the sidelines, relegated to a niche concern for tree-hugging hippies and socially conscious investors. It will be the year ESG takes centrestage, becoming the very lens through which business decisions are made, strategies are formulated, and success is measured.

It’s the year ESG takes a bionic bite, leaving an indelible mark on the future of every industry, every corporation, and every one of us. So, buckle up, fasten your green seatbelts, and prepare to witness the rise of a new paradigm, a world where sustainability and profitability go hand in hand, and where doing good for the planet is synonymous with doing good for business. The future is bright, the future is green, and the future is ESG.

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